Global aid drops as rich nations struggle

IRIN) – Official Development Assistance (ODA) has continued to fall as wealthy countries battle an ongoing global financial crisis and a struggling Eurozone, according to the Organisation for Economic Co-operation and Development’s (OECD) latest report. Aid decreased by 4 percent in 2012 compared to 2011, which had already experienced a 2 percent decline on the previous year, the report found.

Aid Drops as Developed Nations Struggle- IRIN

This is the first time since 1996-1997 that aid has fallen in two successive years.

Most assistance – approximately US$125.6 billion in 2012 – still comes from members of the OECD’s Development Assistance Committee (DAC), but emerging donors such as Saudi Arabia, Turkey and the BRICS nations (Brazil, Russia, India, China and South Africa) are becoming increasingly important to humanitarian aid.

Below are some of the key ODA trends from recent years:

Big donors still key – The G7 countries provided 70 percent of total net DAC ODA in 2012, with DAC-EU countries contributing 51 percent. ODA rose in nine countries, with the highest jumps coming from Australia, Austria, Iceland, Korea and Luxembourg. Fifteen countries recorded drops, with those worst-affected by the Eurozone crisis – Spain, Italy, Greece and Portugal – making the biggest cuts.

The largest DAC donors were the US, the UK, Germany, France and Japan. A number of countries gave significant portions of their gross national income (GNI) as ODA, with Luxembourg, Sweden, Norway, Denmark and the Netherlands contributing over the “0.7 percent of GNI” target first committed by wealthy nations in 1970 and reaffirmed several times since. The UK recently confirmed that it would spend 0.7 percent of its new budget on international development. On average, however, in 2012 DAC countries spent 0.43 of their GNI on aid.

DAC countries feeling the pinch – A number of the world’s biggest donors are suffering internal economic crises that have affected their ODA spending; Japan, Spain and Greece saw negative growth while the US saw growth of under 2 percent in 2011, and the UK’s GDP rose by less than one percent.

Non-traditional donors on the rise – Contributions from emerging donor nations are becoming increasingly important to global aid, especially as traditional donors struggle with economic crises at home. In 2011, Saudi Arabia contributed over $5 billion, up from $1.5 billion in 2007, while Turkey more than doubled its ODA in the same period, reaching $1.27 billion in 2011. According to the OECD, development assistance from non-DAC countries exceeded individual DAC country contributions. For instance, in 2010, “Saudi Arabia provided $3.48 billion in gross ODA, exceeding the gross ODA volumes of 12 of the 23 DAC countries. In the same year, China provided an estimated $2 billion in gross ODA, and Turkey $967.4 million”.

Non-traditional donors offer an alternative source of development finance for poor countries, sometimes setting up their own development initiatives – such as the India-Brazil-South Africa Trilateral – separate from the OECD.

Increased humanitarian aid – Twenty years ago, contributions for humanitarian aid made up 3.3 percent of total bilateral commitments from DAC countries, with other commitments going to other forms of assistance, such as economic or administrative aid. Today, humanitarian aid makes up 8.6 percent of these commitments. The highest aid contributions by DAC countries are to social and administrative infrastructure such as education and healthcare – an estimated 39 percent – while economic infrastructure like transport, agriculture and mining received 16.2 percent of DAC ODA.

Different donors tend to prioritize different sectors – Luxembourg spent over 18 percent of its aid on humanitarian needs and 0.1 percent on economic infrastructure, compared to South Korea, which spent 1.3 percent on humanitarian aid and 42.8 percent on administrative infrastructure. The US and European Union institutions, meanwhile, spent over 6 percent of their total assistance on food aid.

OECD statistics show that aid for bilateral projects rose by 2 percent, while aid to multilateral institutions such as the World Bank and UN agencies fell by 7.1 percent.

A geographical shift in aid – The past five years have seen a decrease in aid to sub-Saharan Africa – the world’s poorest region and traditionally the largest beneficiary of ODA – going from 47.8 percent of total DAC and multilateral aid in 2005/2006 to 41.8 percent in 2010/2011. Aid to South and Central Asia rose from 11.5 percent to 19.8 percent over the same period. The Middles East and North Africa also saw a drop of 9 percent between 2005/2006 and 2010/2011, while Oceania, Latin America and the Caribbean all witnessed increases in aid.